The GBPUSD has bounced since hitting its low of 1.03559 on Monday. The catalyst for the initial selloff was Kwasi Kwaarteng's mini-budget, which combined tax cuts and spending. The result was capital flight with gilts hammered before the BoE stepped in, pledging to buy as many long-term gilts as needed.
However, cable's pullback has now hit the R1 pivot on its hourly chart. This level overlaps with the last down legs 61.8% Fibonacci retracement. There is also a hint of support (up blue arrow), which may turn into resistance.
A bearish turn of the EMAs and stochastic (black ellipses) at this confluence may prove problematic. If the stochastic crosses and heads towards the 20 levels, the pressure will be building downwards. Moreover, if it reaches and maintains (red arrow), GBPUSD will be in danger of another leg down.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.